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Asian shares erased earlier modest gains on Friday with the sentiment dented by Wall Street's weakness on concerns about the progress of US tax reform, though regional stocks remain on track for a weekly rise.
European stock futures were down 0.3 per cent, suggesting a downbeat opening for the region, with DAX futures also down 0.3 per cent, CAC futures down 0.2 per cent and FTSE futures 0.1 per cent lower.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 per cent, but poised to gain 0.8 per cent for the week. Chinese shares slumped, with the Shanghai Composite index off 0.8 per cent and the blue-chip CSI300 index down 1.1 per cent.
Japan's Nikkei stock index finished 0.6 per cent lower at its lowest in more than a week, with mobile firms extending a sell-off on concerns of increased competition after e-commerce group Rakuten said it aims to become the country's fourth wireless carrier. The index is down 1.1 per cent for the week.
Big Japanese manufacturers' business confidence improved for a fifth straight quarter in the three months to December to hit an 11-year high, the Bank of Japan's quarterly tankan survey showed. “The Nikkei came off its lows in the afternoon, largely on futures-led buying,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust. “But regional sentiment is still fragile, which will limit its upside.”
US retail sales
On Thursday, US retail sales increased more than expected in November and the number of Americans filing for unemployment benefits dropped to near a 44-1/2-year low last week. That pointed to sustained strength in the economy that could pave the way for further Federal Reserve interest rate hikes next year.
Fed rate hike
The Fed had hiked interest rates on Wednesday but left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in US economic growth from the Trump administration's proposed tax cuts.
“The Fed's move this week was largely perceived as a dovish hike,” said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana.
“It was ultimately well within expectations, and I think the one surprise was how strong the upgrade was for 2018 without any corresponding upgrade for their expectations for inflation,” he said. “That keeps our expectations around three rate hikes for 2018.”
US tax overhaul
On Wall Street on Thursday, major US stock indexes fell, with the S&P 500 down the most in a month, as investor worries over potential roadblocks to the Republicans' tax overhaul more than offset optimism over the strong data.
Republicans in the US Congress reached a deal this week on a final version of their debt-financed legislation to cut taxes for businesses and wealthy Americans, with House and Senate votes expected early next week. But the Bill has yet to get the needed support of some key Senators, and investors worry about downward pressure on stocks if the Bill were to fail.
Dollar index
The dollar index, which tracks the greenback against a basket of six rival currencies, was up 0.1 per cent at 93.570 , down 0.3 per cent for the week. The dollar dipped 0.1 per cent against the yen to 112.26 , down 1 per cent for the week, and moving away from a one-month high of 113.75 yen touched on Tuesday.
The euro was steady at $1.1782. On Thursday, the European Central Bank had raised the growth and inflation forecasts for the euro area, but stuck with its pledge to provide stimulus for as long as needed. Sterling was steady at $1.3437. The Bank of England had also left interest rates unchanged on Thursday, as expected.
Bitcoin rallies
Bitcoin was up 4.2 per cent on the Bitstamp exchange at $17,001, after earlier matching a record high of 17,428.42 set on Tuesday.
Crude oil futures extended gains, after rising on Thursday as a pipeline outage in Britain continued to support prices despite forecasts showing global crude surplus in the beginning of next year. US crude added 0.3 percent, or 15 cents, to $57.19 a barrel, after gaining 0.8 per cent overnight. Brent crude futures were up 0.2 per cent, or 14 cents, at $63.45.
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